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Sunday, January 23, 2011

This article highlights the important factor of district-level savings accounts. While not all districts have them, there are some who were called out during the Select Committee on School Finance interim hearings. Savings account figures were quite high for some districts present and the response from committee members was explicit-- they were livid.

Be prepared for this to make its way in the budget discussion as well as the soon-to-be filed school finance legislation.

-Patricia

By ERICKA MELLON | HOUSTON CHRONICLE
Jan. 21, 2011

In Austin, top Republican lawmakers are touting a no-new-taxes budget that avoids dipping into the state's rainy-day fund.

Local school leaders, stunned by the magnitude of the cuts reflected in the Texas House's base budget, fear they will have to rely on the opposite strategy — reluctantly — to balance their own spending plans.

"They don't want to spend their rainy-day fund," David Anthony, superintendent of the Cypress-Fairbanks school district, said of state lawmakers. "I'm not sure why we would want to spend ours."

But Anthony said his district and others across Texas won't be able to avoid tapping into savings if the cuts to public education are as deep - up to $10 billion - as the House proposed this week.

Some school officials also are considering even more unpopular options - increasing property tax rates or eliminating special tax breaks. In some cases, even those moves aren't expected to raise enough money to plug the worst-case budget holes.

"Right now, nothing is off the table," said Candace Ahlfinger, a spokeswoman for the Pasadena Independent School District, which could lose between $32 million and $53 million under the initial House budget plan.

Under a 2006 state law, districts must ask voters for permission to increase the tax rate by more than a few cents, and the overall rate is capped.

Jackie Lain, who lobbies on behalf of school districts, said they would have a particularly tough time winning voter approval for a tax hike now.

"How do you sell, as a locally elected official, a tax rate increase when the Legislature has said no new taxes?" asked Lain, the director of governmental relations for the Texas Association of School Boards. "It would be a very hard sell. That's like selling ice to Eskimos."
'Not fair to taxpayers'

Pasadena ISD - as well as Houston ISD, Spring Branch ISD, Cy-Fair ISD and about 200 other districts - have another way to increase revenues. Their school boards could decide to eliminate a special tax break, known as the optional homestead exemption, they have chosen to give property owners.

Anthony, the Cy-Fair superintendent, asked school board members to slash the district's 20 percent exemption in half last year, but they voted down his proposal. He said Thursday that he didn't plan to try again.

"That's not fair to our taxpayers," he said.

In HISD, the optional homestead exemption saves property owners more than $100 million a year, according to Melinda Garrett, the district's chief financial officer.

District officials have not suggested revoking the exemption, and Garrett told the school board Thursday that it wasn't clear how much money could be gained by taking this step.

Under the House budget proposal, HISD could lose between $203 million and $348 million - up to a fifth of its budget - according to estimates from a consulting firm. Garrett told the school board that she didn't expect the House plan to be the final word but said the district had to prepare for the worst.
Too much savings?

She said the board could decide to increase the tax rate by a few cents without going to voters because the district hadn't hit the limit yet. Dipping into the district's savings accounts - which total about $285 million - is another option, Garrett said.

Texas Comptroller Susan Combs suggested in a school-finance report in December that districts that maintain excessive fund balances, or savings, should be punished with less state funding. In 2009, more than half of the state's districts had more savings on hand than the Texas Education Agency recommends, according to Combs' report. It did not mention individual districts.

HISD Trustee Carol Mims Galloway proposed that the district increase revenue by soliciting advertising on school buses. A plan is in the works, Garrett said, but HISD Superintendent Terry Grier chimed in with a grim reminder.

"You could sell naming rights to football stadiums and wings of schools and buses," Grier said. "That's not going to solve our problem."